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Application provision

1.1 Unless otherwise stated, this Part applies to:

3.1

01/01/2016

Subject to 3.2 to 3.5, 8.1 and any specific valuation rule, whenever a rule refers to an asset, liability, exposure, equity or income statement item, a firm must, for the purpose of that rule, recognise the asset, liability, exposure, equity or income statement item and measure its value in accordance with the accounting principles.

3.2

01/01/2016

Except where a specific valuation rule provides otherwise:

  1. (1) when a firm, upon initial recognition, designates its liabilities as at fair value through profit or loss, it must always adjust any value calculated in accordance with 3.1 by subtracting any unrealised gains or adding back in any unrealised losses which are not attributable to changes in a benchmark interest rate; and
  2. (2) in respect of a defined benefit occupational pension scheme:
    1. (a) a firm must derecognise any defined benefit asset; and
    2. (b) a firm may elect to substitute for a defined benefit liability the firm's deficit reduction amount.

An election made under (2)(b) must be applied consistently for the purposes of all applicable rules in respect of any one financial year.

3.3

01/01/2016

Except where a specific valuation rule provides otherwise a firm must comply with 4 to 7:

(1) subject to 3.4, to account for

(a) investments that are, or amounts owed arising from the disposal of:

(i) debt securities, bonds and other money- and capital-market instruments;

(ii) loans;

(iii) shares and other variable yield participations;

(iv) units in any collective investment scheme falling within Insurance Company – Capital Resources 13.1(1)(d)(iv); and

(b) derivatives and quasi-derivatives; and

(2) to any balance sheet position not falling within (1) that is measured at market value or fair value.

3.4

01/01/2016

3.3 does not apply to shares in an affiliated company that is:

  1. (1) an undertaking with a Part 4A permission;
  2. (2) an ancillary services undertaking; or
  3. (3) any other subsidiary, the shares of which a firm elects to value in accordance with 8.1.

3.5

01/01/2016

A firm must not place any value on amounts recoverable from an ISPV for the purposes of any rule.